Overlay
Mortgage types

What is an interest only mortgage?

How does an interest only mortgage work?

Interest only mortgages require you to make monthly payments that just cover the interest on the money you borrowed. These payments don’t help to pay off any of the amount you initially borrowed.

This means that you’ll need to repay the full mortgage amount in one lump sum at the end of the mortgage or when you sell the property.

Does NatWest offer interest only mortgages?

How much are interest only mortgage rates?

You can use our mortgage calculator to see the rates and find out how much your monthly repayments could be for a buy to let mortgage.

If you want an interest only mortgage for your own home, then please contact us to speak to a mortgage professional. We don't offer this type of mortgage to all our customers and specific terms and conditions may apply.

What happens at the end of an interest only mortgage?

It's essential that you have a realistic plan ready to repay your capital once you reach the end of the mortgage term.

It’s important that you stick to your repayment plan and this means reviewing it often to ensure it remains on target.

We may check in with you occasionally and ask you to show us that you’re on track and in a healthy position to pay off your mortgage by the end of the agreement.

If you aren’t on target to meet your repayment plan then you need to take action quickly. Either you need to save more or switch to a repayment mortgage. We won’t charge you to switch to a repayment mortgage if we agree that it’s a suitable option for you.

If, at the end of your mortgage term, you choose to repay your capital by selling the property, it’s important to remember that the value of your house depends on house prices at the time of sale.

You could struggle to pay off the full amount if you’re only able to sell the property for a lower value than expected. This may leave you short on equity and unable to purchase another property.

Information for interest only mortgage customers

The Financial Conduct Authority (FCA) has published its research into consumers’ ability to repay their interest-only mortgages when they mature. The findings show that many people should be in a good position to repay their mortgage when it is due for repayment.

However some borrowers will need to take control of their mortgage repayment planning now. To that end the FCA, the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA) are working together to ensure lenders contact their borrowers in order to prompt them into checking their plan for repayment is on track and considering the options available to them.

The FCA believes that with careful planning, consideration and engagement with their lender, many interest only borrowers should be able to find a viable way to pay off their mortgage if they take control now.

For any questions or concerns please don't hesitate to contact us using the details listed at the bottom of this page.

Need some help?

Call us

More about interest only mortgages

Something else we can help you with?